Home Remodeling Financing

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Home Remodeling Financing Options in 2023

Home remodeling can be a significant financial commitment. Fortunately, though, there is no need to worry about out-of-pocket costs. You can use home remodeling loans to finance the costs of house renovations and repairs. Hearth financing is available through the AIR Kitchen & Bath Remodeling Center in Atlanta. Regardless of your credit score, you can use them for remodeling projects.

Other rehab loans, such as the Federal Housing Administration’s 203(k) mortgage, can help pay for renovations and repairs to existing homes. The question then becomes, “Which home remodeling financing option is best?” Let’s look at what you should know.

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Financing Options for Home Remodeling Projects

A home remodeling project is a significant task, whether you are getting ready to sell your house or want to give it a facelift for the new season. How to finance remodeling is a major concern that can arise during the planning stages.

To avoid unexpected expenses and financial strain, it’s essential to plan for your home remodel financing options. Depending on your current financial situation and long-term goals, you have several options for financing home renovations.

Home Remodeling Financing

Unless you have a sizable cash reserve, financing home renovations will require a loan. Fortunately, there are abundant home remodeling financing companies to borrow funds to make your vision a reality.

If a homeowner has enough determination, they can find a financing option. The good news is that if you complete your renovations right, you can expect a healthy investment return. The following are some potential options for home remodeling loan options.

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1. Home Equity Line of Credit

Driven by the rising property values, an increasing number of homeowners can now take advantage of home equity lines of credit (HELOC).

Although the installments and closing charges are modest, the initial payments are interest-only. Plus, mortgage interest is tax deductible for homeowners. Before signing a HELOC, borrowers should fully understand all the terms and conditions.

How it works

It operates similarly to a credit card or other revolving line. You can borrow up to a certain amount and pay it back over time, accruing interest.

If you apply for a loan that would finance over 85% of the difference between the current mortgage balance and the worth of your property, the bank probably won’t give you any money.

Your eligibility will also play a role in determining your maximum credit limit. The good news is that a home equity line of credit can directly pay the contractor by cheque or debit.

When is it ideal?

If you have substantial equity in your house but can’t be sure how much it will cost to remodel.

2. Home Improvement Financing

Home improvement loans provide a fixed interest rate and don’t need you to put up any of your equity as security. The amounts can range from $2,000 to $100,000.

You can get a home improvement loan from various sources, including traditional banks, credit unions, online lenders, and private lenders. The terms and conditions are the same as those of a personal loan.

When is it ideal?

If your property has no equity and you don’t want to use it as collateral for a loan, you probably won’t be able to get one.

3. Home Equity Loan

Like a HELOC, a home equity loan requires you to sell your property as collateral. Contrarily, with a home equity loan, you borrow the total sum at once, and payments start immediately. The interest rates are reasonable, and the borrower can use the money however they want.

Plus, the amount you can borrow depends on your income, credit history, and current property valuation.

The key distinction is that with a home equity loan, the homeowner borrows a predetermined amount at a predetermined interest rate. Extra expenses could emerge as well.

When is it ideal?

If your remodeling project is substantial and your contractor has given you a realistic estimate, you can confidently move forward.

4. FHA 203 (k) Renovation Loan

You can finance a home purchase and any necessary renovations with one loan using the FHA’s 203 (k) program. The renovation budget is on escrow and released in stages as work becomes completed.

The minimum amount required for the remodeling is $5,000; the maximum is the same as your local FHA mortgage ceiling.

Applicants must identify contractors willing to bid on the repairs before the loan closes and apply through an FHA-approved lender. Upon loan refinance to remodel, renovations can begin, and escrow money becomes disbursed to contractors.

When is it ideal?

If you have low-income, bad credit, or want to buy a house and renovate it.

5. Cash-Out Refinancing

With cash-out refinancing, you can swap out your current mortgage for a new one and get the difference deposited into your bank account. With cash-out refinancing, you borrow more money than you owe on your house and can use the difference to pay off your debt.

Lenders will consider your income and credit if you apply for a new mortgage. To avoid paying more interest than your home is worth, the loan-to-value (LTV) ratio for a cash-out refinancing cannot exceed 80%.

When is it ideal?

If you have a lot of equity and the lending environment is good for a new mortgage.

6. Personal Loan

Personal loans are much like applying for a loan to repair or upgrade your property. You can expect a higher interest rate because you are not using your property as collateral.

However, unlike other forms of home remodeling financing options, personal loans typically have fewer restrictions on how to use the money.

Most financial institutions offer personal loans. Your eligibility for a loan is contingent upon your credit score.

When is it ideal?

If you don’t have enough equity in your home to qualify for a HELOC or home equity loan, or if you don’t want to use your house as collateral for a loan.

7. Credit Card

Credit cards are one of the most expensive home remodel loan options.

Convenient and possibly rational for a smaller project, this approach is typically more expensive than others.

A new credit card with a 0% APR introductory period could be an exception to this rule. The renovations will cost less if you pay for them during the initial period. One potential perk of paying by credit card is rejecting fees associated with subpar services or products.

However, it can get expensive to carry a sizable debt on a credit card because of the high-interest rates (often between 16 and 24 percent). It can also make it harder to get approved for other, more favorable loans.

Credit scores drop when cardholders use too much of their available credit, as can happen when financing expensive home improvement projects.

2. Not Having a Budget

When is it ideal?

If you don’t have enough equity in your home to qualify for a HELOC or home equity loan, or if you don’t want to use your house as collateral for a loan.

Reasons to Consider Financing Your Project

The reason to consider home remodeling financing depends on several factors, including:

Debt funds, on average, have a lower expense ratio than equity funds. Why is debt capital preferred over equity capital? Principally because interest payments on debt capital are tax deductible.

Financial risk is a project’s biggest concern. The term “financial risk” refers to the danger of using borrowed money. Although debt capital is cheaper, it is dangerous because of its fixed financial burden.

Control is essential and given the lender’s financial commitment to the project, it makes sense to favor a financing scheme that gives you the most possible say in the lender’s day-to-day operations.

The term “funding flexibility” refers to a project’s potential to secure extra funding from any available source. It keeps its borrowing options open to raise debt capital if required.

Finance Computation in Atlanta

Benefits of Financing

Which Remodeling Projects Can We Finance (Our Services)

Here are some of the remodeling projects AIR Kitchen & Bath Remodeling Center can finance:

1. Kitchen Remodeling

We finance kitchen remodel loan so that it serves your needs and get the space you’ve always wanted.

A kitchen island is an excellent place to start because it can improve the look and utility of your space. If you’re going for a more modern style, our kitchen remodeling financing options can help you bring your space up to date.

The professionals at AIR Kitchen & Bath Remodeling Center in Atlanta are the best at providing a holistic service for kitchen renovations of any kind. Whatever path you choose, get professional kitchen remodeling services to receive the ideal outcomes

Kitchen Styles Popular in Roswell
A bathroom showing a bathroom sink, a shower and bathtub, a chair, a mirror, and a bath cabin

2. Bathroom Remodeling

Redesigning or renovating your bathroom is a smart approach to updating the appearance of your house. If done right, a finance bathroom remodel can bring you an excellent return on your investment.

AIR Kitchen & Bath Remodeling Center experts can help you install a brand-new sink, glass shower door, or beautiful tile flooring.

We have everything needed to complete financing your bathroom renovation. The best part? We’re a one-stop shop, including financing, so there’s no need to look elsewhere for help with the remodel.

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4. Complete Interior Design

AIR Kitchen & Bath Remodeling Center provides financing options for home additions and treats any interior redesign for a home like a remodel. The scale of this undertaking requires meticulous preparation and careful execution.

A custom home interior designer in Atlanta with our level of experience can bring your idea to life in the most economical way possible. Plus, we will execute it with an eye for detail and a commitment to the highest standards of craftsmanship.

Basement with bar, large tv, a center table, and a big couch
Basement with bar, large tv, a center table, and a big couch

4. Complete Interior Design

AIR Kitchen & Bath Remodeling Center provides financing options for home additions and treats any interior redesign for a home like a remodel. The scale of this undertaking requires meticulous preparation and careful execution.

A custom home interior designer in Atlanta with our level of experience can bring your idea to life in the most economical way possible. Plus, we will execute it with an eye for detail and a commitment to the highest standards of craftsmanship.

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Available Financing Options

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As a pre-qualified consumer, thanks to AIR Kitchen and Bath Center’s Partnership with Hearth, you are eligible to receive a loan in as quick as 2 minutes! Just enter your details, your budget and details about your credit score — and the “Remodeling Estimate Calculator” will automatically create an affordable plan for you. You can spread out your payments across many months or even years to avoid paying everything up front. Regardless of your budget, you can find a payment plan that works to remodel your kitchen or bathroom you can be proud of. Many plans start for less than $100/month, although a more realistic estimate should come up to just $150.”

How to Apply for Financing

There are a few things to remember before researching loan terms or determining how much money you need.

When applying for a loan, it’s a requirement to present original documents depending on the lender. You’ll need to include personal information like your SSN, current residence, and monthly salary on the loan application.

As a rule of thumb, there are three things you’ll need to have on hand when applying:

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  • Identification documents, such as a passport, ID card, or driver’s license.
  • Documentation of income, such as tax returns, W-2s, or bank statements.
  • Proof of residence. Here an electric or water bill, or your lease, will do.

Your lender may also require you to list a co-signer’s name and contact information and the loan’s intended use besides the above basic information.

6 Steps to Securing a Personal Loan

  • Check the Numbers

    The last thing you or your creditors want is for you to take out a personal loan and find yourself unable to repay it. Lenders will normally check your credit history and income to ensure you can repay the loan, but you should too.

  • Check Your Credit Report

    Lenders typically analyze credit reports to gauge a borrower's reliability regarding loan repayment. While some online lenders may now consider alternative credit data, most will still look at your credit score as the primary indicator of your creditworthiness.
    The best personal loans require an acceptable credit score between 580 and 669. If your credit score is 670 or higher, you have a significant chance of approval for a loan at a reasonable interest rate.

  • Evaluate Your Options

    Your credit history may require a co-signer to qualify for a personal loan at a reasonable interest rate. You can receive a secured personal loan instead of an unsecured one if you cannot find a co-signer or the lenders you are considering do not accept co-signers.
    Secured loans offer better rates and terms for collateral, usually a car, houses, or liquid assets, like a savings account or CD. The lender can take the collateral and use it to repay the loan if it's defaulted.

  • Select a Loan Type

    Once you know your credit score and have researched your loan options, you can pick the most suitable one for your needs.
    Some loan providers don't care how you put the money to use. However, others might only consider your application with proof that you will use it as per the defined objectives.

  • Shop Around for the Best Personal Loan Rates

    Instead of accepting the first offer you receive, take your time and browse around for the optimal interest rate. Find out what you qualify for by comparing various lenders and loan forms.

  • Pick a Lender and Apply

    Once you've done your homework and determined which lender can meet your specific needs with the best terms, you can apply.
    You can complete the entire application process online with the right lender.

Final Tips

Homeowners should carefully explore their financing alternatives before settling on the one that best suits their unique needs and goals.
In the metro Atlanta area and throughout Georgia, the AIR Kitchen & Bath Remodeling Center allows clients to finance home improvements at competitive rates without negatively affecting their credit.
What’s even better? We are a dependable third-party warranty partner who can offer solutions for craft, material, and structural flaw coverage.

Contact Us for Help with Financing
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Frequently Asked Questions

You must consider design, materials, and labor when planning a kitchen redesign.

The FHA 203(k) mortgage program is ideal for purchasing a fixer-upper or renovating an older property. When you get a 203(k) rehab loan, you can combine the purchase price of the house and the cost of the repairs into a single loan, saving money on closing costs and interest.

The loan type you select will determine the duration of your home improvement term. The average period for a personal loan is between 1 and 5 years. Mortgage loans have lengthier payback terms than unsecured loans.

Paying for renovations out of pocket is the most cost-effective strategy. You can save money by taking out a loan or line of credit against the equity you have in your house. You won’t put up your home as collateral with an unsecured loan, but you’ll pay higher interest.

Typically, closing fees for an FHA 203(k) loan are between 3% and 6% of the loan amount. Closing charges for a home equity line of credit, or HELOC, average around 2% of the loan amount. An interest rate on a loan of $50,000 could range from $1,000 to $2,500.

You can consider financing options that offer low or zero interest rates, such as credit cards with introductory offers or personal loans from credit unions. Another strategy is to prioritize the most critical upgrades and postpone the cosmetic ones until you have more funds available.

The time it takes to get approved for kitchen remodeling financing varies depending on the lender and the financing option you choose. Some lenders may offer instant approval, while others may take several days or weeks to review your application and make a decision.

The eligibility requirements for a kitchen remodel loans vary depending on the type of loan you choose. In general, lenders will consider factors like your credit score, income, and debt-to-income ratio when deciding whether to approve your application.

The repayment terms for kitchen remodel loans vary depending on the lender and the type of loan you choose. Some loans may have repayment terms of several years, while others may offer longer repayment periods of 10 years or more.

  • The cost of a kitchen remodel with financing can vary widely depending on the scope of the project and the financing option chosen. It’s best to get quotes from multiple contractors and compare financing options to find the most affordable solution.

When seeking financing with bad credit, it’s important to watch out for high interest rates, fees, and predatory lenders who may take advantage of your financial situation.

To find kitchen remodeling companies that finance, you can start by searching online using keywords like “kitchen remodeling financing” or “kitchen renovation financing.” You can also ask friends and family for recommendations, or check with local home improvement stores to see if they offer financing options or can refer you to a reputable remodeling company.

Yes, a personal loan can be a suitable financing option for a bathroom remodel as it offers flexibility in terms of loan amount and repayment terms.

We are one of the only few companies in Atlanta that offer home remodel financing. Call us on 470-805-5522 to know more
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